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John Healey: Resilience, to use the jargon, is a question of how homes and areas can be better protected against flooding in the future. It is increasingly a feature of the way in which we wish to see the planning system used where there may be a risk of flooding. With regard to housing or other development, resilience is principally a matter of the
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investment that may be available for the sort of defences that can protect areas and homes. My hon. Friend will know, because he has pressed his case equally hard with Ministers in the Department for Environment, Food and Rural Affairs, that we are set to increase investment in flood defences still further over the next three years, having doubled it already. That programme of work will bring a good deal of benefit in its acceleration of some important and necessary schemes.

In this local government settlement, our concern is to reflect the circumstances and service circumstances of all local authorities. That is why the additional help we put in place for Gloucestershire and other areas since the summer floods has been paid alongside the funding system, but separately. That is a better and more flexible way of dealing with the matter for the future.

Rosie Cooper (West Lancashire) (Lab): While I appreciate that the Government will have increased funding to local authorities by 45 per cent. by 2011, and that the Tories made a real-terms cut in such funding in the four years leading up to 1997, I am sure that I am not the only one who tires of Tory-controlled councils continually complaining about Government funding while taking the credit for Government-funded initiatives. Does the Minister agree that councils such as my own, the Tory-controlled West Lancashire district council, instead of wasting time and resources on doing things such as building a new town hall in Ormskirk, ought to get their priorities right and invest their Government cash in front-line services? The council need to begin with the cemetery, which we badly need.

John Healey: To be fair to my hon. Friend’s council, I cannot judge whether its proposals for new civic buildings are the right thing for the town. However, I can tell the council—she may wish to say this to it herself—that if it takes the steps that we support, and which we expect it to take, to do what it does more efficiently, to cut out waste and to do things in new ways, it will free up significant extra resources next year and each year during the spending review period, which it can then invest in the services that my hon. Friend rightly wants to see.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab): My hon. Friend has made great play of the need for transparency, openness and efficiency, and suggested to all my hon. Friends that, although they are faced with real problems, only a certain amount of administration is required to ensure that all will be well. If he has such total confidence in his formulae and the suggestions of his Department, why did he refuse a freedom of information request to reveal straightforward figures on which decisions for the county of Cheshire have been based? Surely that does not sit too comfortably with what he has been telling us about the need for openness.

John Healey: The simple answer to my hon. Friend is that the matter concerned advice to Ministers and by tradition and convention, such advice does not fall within the remit of such requests. I have no problems with that. We will have the opportunity to debate the
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Government’s proposals—I am sure that she will be first to speak in that debate and the first to intervene on me—and an order that seeks to restructure local government in Cheshire, a subject that she feels strongly about and has pursued closely.

Mr. Nick Hurd (Ruislip-Northwood) (Con) rose—

John Healey: I shall give way one more time and then I will try to get off the first page of my notes.

Mr. Hurd: I am grateful to the Minister for giving way; he has been extremely generous in taking interventions.

The Building Schools for the Future programme is a core Government programme. Hillingdon council tells me that as a direct consequence of its grant, £15 million of capital spend it would like to deploy to support the programme is at risk because the revenue grant has taken them through the floor. An element of borrowing that was supported is now unsupported. Is that joined-up government, and what guidance would the Minister give to authorities such as Hillingdon that are in that predicament?

John Healey: It is joined-up government. The hon. Gentleman has received an inadequate briefing from Hillingdon council. I shall write to him to explain in some detail, but the fact is that where supported borrowing is awarded by central Government to local government, the revenue costs to support that borrowing are built into the settlement, as they were this year and as they have been before. That will mean that as part of the formula grant allocation the hon. Gentleman’s council will have the amount of revenue to support the borrowing that it has been granted. It will have that even before the amount that it gets each year is increased to bring it up to the floor. The idea that authorities that are below the floor—the hon. Gentleman argues this for his local authority—are penalised and unable to carry out supported borrowing is entirely a misunderstanding of the system. If it helps him and his council to see the picture more clearly, I am more than happy to write to him in detail to set out what I have explained more clearly.

Formally, we are debating the core formula grant distribution for 2008-09 that covers the totals of redistributed business rates and the revenue support grant, the final details of which I laid before the House on 24 January. The House will have the opportunity to debate the formula grant for 2009-10 and 2010-11 as usual each year. However, let me make it clear that the policy on three-year settlements means that I am unlikely to change the distribution that I have already proposed and published, except in entirely exceptional circumstances.

This is a tight settlement, but public finances are limited for central and local government. Unlike six other departments, which have seen a reduction in funding over the spending period, local government has seen an average 1 per cent. real-terms rise. My distribution decisions mean that every council in every region will have an increase in core grant in each year over the three-year period. So, the settlement is tight, but it is also fair and affordable.

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There will be a rise of almost £1 billion in the core grant for councils next year, but if they make the same 3 per cent. efficiency savings that we expect of other parts of the public sector they will have another £1.5 billion available to improve services and to keep council tax pressures down next year. I hope that that approach has the support of hon. Members on both sides of the House and that all hon. Members will ask their authorities what they are doing to realise those savings.

Central Government can and will help local government to cut waste and to do things differently and better. We are therefore investing more than £380 million over the next three years for council improvement and efficiency, including £185 million for the local government-led regional partnerships. However, councils must look for such improvement and efficiency not because Ministers say so or because it benefits the Government, but because it frees up cash for councils and is therefore directly in the interests of local services and local people.

I want to equip local residents to challenge their council on whether it is running more efficiently, as they have a right to expect. From 2009 information on waste and better working will be set out with council tax bills, so that local people can see what is happening in their council’s search for greater efficiency. I will consult on that later this year.

In framing our spending plans, we have worked closely with local government. We are delivering the important reforms for which it rightly argued. Local government pressed for greater certainty and so we made the first ever three-year settlement. Local government asked for greater flexibility and so we will move £5.5 billion into grants with no restrictions on spending. Local government wanted less red tape and so we radically streamlined the targets system from 1,200 targets for some councils to about 200 national indicators for all. Local government analysed the funding pressures with us and so we covered them in the settlement and gave the biggest rises to councils with social care and waste disposal responsibilities. Finally, local government made the case for more financial freedoms and so we will give councils new powers for business rate supplements, the community infrastructure levy and transport charges alongside recent borrowing and trading powers.

Following my consultation, I can confirm my proposed grant distribution in all major respects. I have decided to accept representations from the LGA and others, as my hon. Friend the Member for West Bromwich, West (Mr. Bailey) urged me to, and have adjusted the calculation of grant increases for the purposes of the floor to reflect the transfer to local authorities of full funding for family law cases, a matter on which the Ministry of Justice announced a consultation on 19 December. That adjustment does not affect the amount of grant available in 2008-09, which already covers that spending pressure. However, it ensures that the floor increase is calculated on a like-for-like basis that includes the funding change. I also made corrections to the data used where it was justified. In other respects, the grant distribution is as I proposed on 6 December.

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In particular, I can confirm that we will implement fully the relative needs formulae for social services, which were decided in 2005 and introduced in 2006 but have been damped over the past couple of years. We will make the system fairer by increasing by 2 per cent. each the size of the relative needs and relative resource blocs. We will set the grant floors to give all authorities guaranteed minimum increases over the next three years at the same levels as I announced on 6 December. As in previous years, the floors will be paid for within each group by scaling back the grant increase above the floor.

Let me deal briefly with some of the other points that were raised in the consultation and that have been incorporated in associated announcements. Local authorities and hon. Members have raised the issue of population and migration data with me in their representations during the consultation and in debate. As I have consistently made clear, councils welcome the three-year settlement. They welcome the certainty and the knowledge about what they will get over the next three years. To deliver a three-year settlement, we have to use the best and latest data that are available consistently across the country at the time we calculate the three-year settlement. We therefore use the most recent set of local population projections produced by the Office for National Statistics, which were produced on 27 September 2007.

I can confirm that we will put in place a cross-Government programme of work driven by senior officials from central Government and the LGA, and led by the national statistician. That will accelerate the work that has already begun to improve population statistics, including on a local level. The senior programme board will aim to meet for the first time this month. To support that programme of work a ministerial group, jointly chaired by me and the Minister for Borders and Immigration, will be set up, while the independent statistics board will ensure the quality of the statistics that are produced.

Simon Hughes: It is a consolation that the work will be done as the Minister has announced, although it is not necessarily an answer. When does he expect and by when will he, as the chair of that group, require the work to be completed and implemented for the first time so that it can impact on settlements in the future?

John Healey: The Office for National Statistics has set out a programme of improvements, which will be accelerated and amplified by the contribution that local government can make to the work. The hon. Gentleman and I have discussed the problem that faces us all. Local authorities often say that they have electoral registration data, GP registration data and national insurance registration data, but that they do not have sources of administrative data, such as those that I mentioned, that are consistent throughout the country and therefore form a suitable basis for the funding distribution decisions that local authorities wish to make. In the end, such data measure what they measure: they are not necessarily measures of population or migration but they can give us useful double-check and triangulation information. I hope that that can happen without undue delay, especially if the work is accelerated in the way in which my hon.
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Friend the Minister for Borders and Immigration and I intend. However, the data must have the statistical reliability that we all need.

Mr. Burrowes: Will the search for more accurate population statistics mean taking full account of the impact of short-term migration, especially on councils such as Enfield? Will that lead to an opportunity for making a case for exceptional circumstances and thus readjusting the three-year settlement figure?

John Healey: In all honesty, I cannot give the hon. Gentleman the sort of guarantee or assurance that he seeks. Surely he accepts that, first, we need to improve the analysis and data that we have on population and migration movements. Our population is changing rapidly and becoming more mobile, and our sources of data struggle to keep up with that. We use the best and the latest that we have, but we clearly need to improve. Making a case for saying that the nature of a specific population imposes additional costs on particular public services and that that needs to be recognised in the distribution of funding support from central Government is a step beyond the data step. The decisions that I have been taking as part of the current settlement follow. If we can find better data and formulae, how and whether they are used becomes a question of policy.

Jim Cousins (Newcastle upon Tyne, Central) (Lab): What my hon. Friend has just told the House genuinely advances the debate and shows a way out of an intractable problem. However, he knows that his grant data are in three-year slabs, with no system of retrospective adjustment. Can he offer at least the possibility of a specific grant in future years that will correct matters for the vexed issue of population?

John Healey: Again, I cannot give my hon. Friend the specific assurance that he seeks. However, the Government make specific grants available alongside the mainstream settlement. As a member of the Treasury Committee, he knows better than anyone that it is important to improve matters, not only for the funding decisions that Ministers—not just me but those in other Departments—make, but because we must have better population data on which to base the 2011 census if we want to avoid some of the worries and weaknesses of the 2001 census.

Julia Goldsworthy (Falmouth and Camborne) (LD): To follow the question that the hon. Member for Enfield, Southgate (Mr. Burrowes) asked, will the Minister confirm whether the group will specifically consider the impact of short-term migrants? Although I welcome the review, we knew that the EU would expand—that has caused many short-term increases in population—so why was it not established in anticipation of the expansion?

John Healey: Short-term migration poses a genuine challenge to us all. The increasingly obvious phenomenon poses several questions. First, many short-term migrants are light users of local government services and strong contributors to local economies and the local tax base. Secondly, it is fair to say that five, let alone 10 years
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ago, the sort of population change and mobility that we are currently experiencing would have been difficult to predict.

David Howarth: The Minister’s point about migrants’ burden on local government services being light may be true of the upper tier of services, such as social services and education, but it is not true of the lower tier, which consists of simple things such as rubbish collection. Does not that show how wrong it is to assume that the only movement of money should be from districts to counties?

John Healey: I have explained the reason for the main elements of the distribution. On migration in district councils in two-tier areas, the purpose of giving the Local Government Association a place at the heart of the work is to ensure that—as the LGA does—all council interests are represented, irrespective of type and political control. Surely that is right.

Mr. George Mudie (Leeds, East) (Lab): Given that 0.04 per cent. persuaded the Minister to take Leeds out of the working neighbourhoods fund, thus removing £42 million from Leeds in the next three years, and leaving Leeds as the only big city in the country without money from the fund, is he prepared to reconsider that statistical blip? Otherwise, the inner city of Leeds could suffer the consequences.

John Healey: I know Leeds well, although not as well as my hon. Friend. It has been successful in many areas in the past 10 years. We have carefully considered the methodology and the figures that we use. However, if one sets a threshold and criteria, some authorities will meet the criteria and others will not. Some authorities will come close to fulfilling the criteria and others will not. My hon. Friend’s authority is one of 22, including mine, that have been eligible for money from the previous neighbourhood renewal fund but that are not eligible for payments from the working neighbourhoods fund. However, he knows that, to ensure that there is no cliff edge in funding, we will provide transitional funding of 60 per cent. for next year and 40 per cent. the following year. He should also bear it in mind that, by removing the strings that are attached to much funding for local councils, there is scope for them to make decisions about what they want to do to regenerate, improve the economy and make progress in areas such as some of those in his constituency.

Today, I have published on the Department’s website the confirmed allocations for next year from the working neighbourhoods fund. Twenty-two authorities will get transitional rather than full funding, and 65 authorities will get the full funding. In the next three years, our support, drawn for the first time from both the disadvantaged areas grant of the Department for Work and Pensions and our regeneration funding, will total approximately £1.5 billion, designed to concentrate our support on areas where deprivation continues to be most deep seated and difficult to dislodge.

Also today, I have published on the Department’s website the results of the refreshed consultation on the supporting people distribution formula, which closed last month. Following consideration of the responses, I am today confirming final allocations for next year.

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I am conscious that other hon. Members want to speak, so I turn to the local authority business growth incentive. Earlier this year, in the light of new legal challenges, I announced that the Department intended to reconsider all aspects of the approach used to distribute the resources available for year 3 of the scheme. We have also looked again at payments that were made previously for years 1 and 2. I have today laid a written ministerial statement confirming that, in order to avoid the additional delay and uncertainty likely to be caused by further legal challenge, we intend to reward authorities on the basis of a wider set of rateable value change codes than was used previously, in years 1 and 2.

The statement also discusses year 3 payments. It confirms our determination to achieve the policy aim of providing incentives to encourage business growth for local authorities. However, the inclination of a small number of authorities to pursue legal action has created greater complexity, uncertainty and delay. Given that, I consider that it will be necessary to retain a portion of year 3 funding, as a contingency in this final year of the current scheme. I will make further announcements providing more detail on payments for all three years as soon as possible.

Finally on announcements, following the comprehensive spending review in October last year, we announced that a third round of local area agreement reward grant would be available. I can now confirm that the total amount available will be at least £340 million, plus an additional £50 million available in reward grant for more deprived areas, via the working neighbourhoods fund.

In conclusion, the settlement does what it says on the tin. It builds on 10 years of continued real-terms investment; it covers three years; it is tight, fair and affordable; and it reflects many of the arguments that were put to us by local government. It is now for local government to deliver.

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